The surge of enforcement actions by the Securities and Exchange Commission (SEC) has incited contemplation among crypto businesses regarding their operations in the United States.
Robinhood Revisits Its Crypto Ventures
The legal chief of Robinhood Markets, Dan Gallagher, discloses that the firm is reevaluating its cryptocurrency services in response to the increasing regulatory scrutiny within the industry.
This deliberation ensues as the SEC zeroes in on an extensive range of the digital asset market. Recently, the regulatory body initiated a series of lawsuits against two industry behemoths – Binance and Coinbase. Together, these platforms dominate half of the worldwide cryptocurrency trading volume.
During a digital asset-focused meeting of the House Agriculture Committee, Gallagher, who served previously as an SEC commissioner, revealed that Robinhood is “actively reviewing” the SEC’s findings “to determine what, if any, actions to take.”
Robinhood’s Digital Asset Portfolio Under Scrutiny
Robinhood currently enables user access to 18 distinct digital assets, such as Solana (SOL), Cardano (ADA), and Polygon (MATIC). However, according to recent SEC litigation, these cryptocurrencies are now classified as unregistered securities.
Despite Robinhood’s cryptocurrency catalog being comparatively smaller than Binance and Coinbase’s, the firm intends to evade unwanted attention from the SEC.
Previous Regulatory Hurdles
Due to operational issues, the brokerage has previously faced hurdles with numerous US-based regulators. Earlier in the year, Robinhood was directed to remit over $10 million in penalties due to operational deficiencies that negatively impacted investors during the COVID-19 pandemic.
Moreover, a hefty penalty of $30 million was imposed on Robinhood last summer by the New York State Department of Financial Services (NYDFS) due to violations of anti-money laundering and cybersecurity laws.
Additionally, the agency discovered “significant failures” within the firm’s compliance program. Robinhood allegedly adhered to policies that contradicted the virtual currency and cybersecurity regulations set by NYDFS.
The evolving regulatory enforcement landscape is proving to be challenging for crypto businesses, with Robinhood being compelled to reconsider their offerings. It remains to be seen how these organizations will navigate this regulatory minefield to continue providing digital asset services while ensuring full compliance with legal mandates.
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